Time is not ripe for large scale privatisation of public sector banks (PSBs) given the current socio-economic conditions in the country, SBI Chairman Rajnish Kumar said.
Privatisation has not always worked well, and ownership does not matter as there are both good and bad companies in both private and public sectors, he said. “On banking, my view is that the social economic conditions in India as of now are not ripe for large scale privatisation of the banks.
May be, you will reach that stage of development in next 50 years if you continue to grow at the pace at which we are growing,” Kumar said at the Mindmine Summit 2018.
PSBs are much more than commercial entities as they have to fulfil social obligations, and that they have done quite well, he said. Certain industry chambers have stated that the government should consider privatising PSBs as over Rs 2.6 lakh crore capital infusion in the past 11 years has had limited impact in improving their health.
Several experts, including Chief Economic Adviser Arvind Subramanian and Former NITI Aayog Vice-Chairman Arvind Panagariya, had pitched for privatisation of PSBs after a spate of frauds were unearthed in state-owned banks, including the more than Rs 13,000 crore scam in the Punjab National Bank (PNB).
However, Nobel Peace Prize-winning economist Muhammad Yunus has said that he was not in favour of privatisation of PSBs as private banks had not shown any ‘exceptional performance’ in many countries.